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Do I need an estate plan?

Do I need an estate plan?

Yes. Although many people believe they do not have enough assets to need an estate plan, some level of estate planning is important for everyone. A proper estate plan can provide protection and planning for temporary or permanent incapacity. Many estate plans also include a trust, which avoids probate, the lengthy legal process for transferring assets to your beneficiaries. A trust provides flexibility, allowing you to financially provide for your surviving spouse without unintentionally disinheriting your children. A trust also allows you to protect minor children from receiving an inheritance they may not be responsible enough to handle at age eighteen. Although not everyone needs a trust, everyone needs more than just a simple will.

Incapacity Planning

Incapacity planning is one of the most important aspects of estate planning. A proper estate plan includes documents appointing a person or persons of your choice to handle your finances and medical decisions. Even young adults with no assets should plan for their potential incapacity. The moment a person turns eighteen, a parent no longer has legal authority to make health decisions. If you become incapacitated, someone in your family will have to petition the court to become your conservator, giving them the legal right to manage your health and financial decisions.

The conservatorship process is complicated, time consuming, and can be very emotional for family members. Any family member can apply to be conservator, but it is ultimately the court that decides who will be appointed. The court will continue to oversee the conservatorship throughout the entire process. Every action the conservator takes is subject to court review. The court will require the conservator to maintain records of all financial transactions and provide an annual accounting. Having proper documents in place, that will only take effect during your incapacity, avoids the time and expense of court involvement and oversight.

Probate Avoidance

Any person with total assets of $150,000 or greater has an estate that must go through probate. Assets include real property, retirement accounts, life insurance, stocks, and any personal property you own at death. Probate is a public process, meaning that once probated, anyone can obtain a copy of your will. Probate is also a lengthy process that has become even longer due to the severe court budget reductions in California and the closing of our north county probate court in San Diego. Holding your assets in a trust can expedite the transfer of property to your intended beneficiaries.

Protecting Children from Themselves

In California, a guardian must be appointed to manage an inheritance left outright to any child under eighteen. You can appoint a guardian in your will or if you fail to do any estate planning, the court will appoint someone for you. However, once the child turns eighteen, they will receive all of the money outright. At eighteen, a child may not have the maturity to spend or invest the money the way you may have intended. By placing assets in trust, you can set guidelines for your child, decide what your child can use the money for, and at what age. You can also appoint someone you choose to manage your child’s trust and even allow your child to take control of the trust at a certain age.

Remarriage and Blended Families

Under California law, without an estate plan, your spouse will inherit all of your community property upon your death. This often results in unintentionally disinheriting your children from a prior marriage. This usually occurs in one of two ways. First, if your surviving spouse remarries and comingles the assets with a new spouse, your children could lose their inheritance to the new spouse. Second, leaving all of your assets to your new spouse could result in your spouse spending your children’s inheritance during your spouse’s lifetime, leaving nothing for your children. One solution is to leave your assets in trust to provide for your spouse during their lifetime, with the remainder going to your children. A customized estate plan can find the right solution for any family.

Call us today to schedule your free consultation and learn what type of estate plan best meets your family’s needs and goals.

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*Does not create an attorney-client relationship. An executed representation agreement is required to create an attorney-client relationship. Call for more information.
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